Industry offers facts versus fiction on ratings and oil prices

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WASHINGTON (AP) — House Democrats this week accused oil companies of “ripping off the American people” and putting profits ahead of production as Americans suffer from steadily rising gasoline prices during the war in Ukraine.

Oil executives, testifying before Congress for the second time in six months, responded that oil is a global market and oil companies do not dictate prices.

“We don’t control the market price of crude oil or natural gas, or refined products like gasoline and diesel fuel, and we have no tolerance for price gouging,” Chevron’s CEO said. Michael Wirth.


The Reporter-Telegram collated reactions from the American Exploration & Production Council, the Permian Basin Petroleum Association and the Texas Independent Producers and Royalty Owners Association.

myth versus reality American Exploration and Production Council

As Congress holds hearings on the price of oil, it is important to set the record straight on the various factors driving high gasoline prices. Reality: Prices are not caused by energy companies. Another fact: It’s time for Congress and the administration to enact and implement effective policies that provide relief to American families and small businesses.

MYTH: Currently, gas prices are extraordinarily high because oil and gas producers are “cheating consumers” to reap massive profits for their companies and shareholders.

FACT: Gas price hikes are largely the result of demand dramatically outpacing supply as the economy recovered from the pandemic, coupled with misguided policies by the Biden administration. Shutting down energy pipelines, restricting oil and gas development on federal lands, imposing burdensome and redundant regulations, demanding punitive taxes and fees for our industry, and mobilizing the federal government to quickly end the use of fossil fuels – these measures drive up costs that directly hurt American families and businesses. High energy prices were further exacerbated by the significant impact on global energy markets due to Russia’s invasion of Ukraine. International conflicts and harmful domestic regulatory policies directly contribute to significantly increased energy costs for the American people.

MYTH: Oil and gas producers intentionally sit on 9,000 federal leases and choose not to produce.

REALITY: The reality is that the vast majority of leases on federal lands currently produce oil and gas. There are approximately 37,500 oil and gas leases in effect, of which about 75% are producing, and the remaining 25% are subject to a complex regulatory process or blocked by litigation. This is the highest percentage of production leases the industry has ever had.

MYTH: Oil and gas producers could immediately increase production to meet increased demand, which would lower energy prices.

FACT: We responsibly produce and supply energy to market in a way that meets current demand and future projections. The oil and gas industry is heavily regulated by local, state and federal agencies at every phase of the energy production process. It takes months, if not years, of planning, permitting and preparation for one of our members to find exploitable reserves, then drill and complete a well before the oil or natural gas can reach the market. . From the regulatory outlook to storage levels, to additional sanctions on Russia, to how OPEC countries will react to increased US production – there are still many unknowns in today’s global oil market. . Inflationary costs, labor shortages and supply chain disruptions are just a few of the many factors hindering increased domestic production. According to projections by the Institute for Energy Economics and Financial Analysis, inflationary pressures could lead to a 15-20% increase in capital costs for producers just to maintain current levels of oil and natural gas production.

MYTH: The Biden administration did everything it could to lower energy prices for the American people.

FACT: By failing to conduct legally required lease sales, shutting down energy pipelines, not approving permit applications, and putting in place regulatory barriers to production, the administration has taken several actions that impede the production and therefore have a negative impact on the price of oil for consumers. Our companies do not have the ability to fix the price of oil or natural gas, only to make long-term assessments or investments based on, among other things, the availability of capital and the current regulatory environment. The best way for Congress and the administration to ensure that Americans have a stable and abundant supply of oil and natural gas is to work with our industry to establish sensible regulations and policies that allow us to meet national and international demand.

– Anne Bradbury, Executive Director of the American Exploration & Production Council

PBPA: the government wants to win on both counts

On Wednesday, the U.S. House Energy and Commerce Committee’s Oversight Subcommittee held a “hearing” with U.S. energy CEOs to discuss “rising oil prices.” gasoline and pain at the pump”.

Over the hours of questioning, some committee members failed to recognize the impact that global market volatility and uncertainty with federal and state regulations across the country represent an incredibly significant challenge to investing in the sector. While members of Congress are surely concerned about the impact of high gas prices on the people they serve, some, led by the Biden administration, have only criticized energy workers. These officials do not recognize the role they play in limiting the growth of production. A proposed Biden budget proposal in the administration’s early days spoke of the end of fossil fuels…and now some are calling for more production. Today, the federal government wants to have it both ways.

Our industry has struggled to work with the administration for nearly 18 months, including in August 2021 when President Biden called on OPEC+, which includes Russia, to produce more oil and gas, instead of working to help American producers who were ready to get back to work after a long pandemic.

Due to administration policies, the industry is experiencing permit delays, supply chain constraints and the collection of raw materials like steel and sand. We need a greater workforce and investment in the sector both of which have been frozen by DC rhetoric that seeks to eliminate the industry and the jobs it creates. We need the US government to choose places like Midland not Moscow and we need it to do that yesterday, not hold “hearings” in the halls of Congress where it surely seems like no one is listening .

– Ben Shepperd, President of the Permian Basin Petroleum Association

TIPRO: Oil and gas companies do not define the market

“American oil and gas companies do not fix the market but are subject to it like the rest of the world. Oil prices are determined by the complex web of commodity prices, and in recent months the market has suffered severe shocks, including Russia’s invasion of Ukraine and rising inflation, which have drives up world oil prices. Instead of polling the energy industry, congressional leaders should focus on how we can support increased domestic oil and gas production, both today and tomorrow. . This includes expediting permits for U.S. LNG export facilities and pipeline infrastructure, lifting the federal lease ban, and generally a more stable regulatory environment that provides certainty for producers and investors. Overly burdensome regulations, increased taxes, and anti-oil and natural gas rhetoric will only exacerbate high energy prices and increase costs for American consumers.

– Ed Longanecker, President, Texas Independent Producers and Royalty Owners Association

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